Which one of the following statements is true regarding a lessor’s treatment of a lease modification originally classified as an operating lease?
Upon modification, the classification criteria are not reassessed for operating leases
Upon modification, the arrangement is not treated as a new lease
A lessor would include any prepaid or accrued lease payments in the lease payments for the new lease
A lessor would derecognize any remaining prepaid or accrued lease payments from the original lease
Upon modification, the classification criteria are not reassessed for operating leases. According to the principles outlined in the reference materials, once a lease is classified as an operating lease at the beginning, it is not reevaluated for classification upon modification. Therefore, the correct statement is that the classification criteria are not reassessed for operating leases when there is a modification.
